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Nice Guys Finish Last: Do Honest Taxpayers Face Higher Tax Rates?
Author(s) -
Doerrenberg Philipp,
Duncan Denvil,
Fuest Clemens,
Peichl Andreas
Publication year - 2014
Publication title -
kyklos
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.766
H-Index - 58
eISSN - 1467-6435
pISSN - 0023-5962
DOI - 10.1111/kykl.12042
Subject(s) - argument (complex analysis) , economics , voting , indirect tax , face (sociological concept) , ad valorem tax , public economics , tax reform , politics , direct tax , nice , tax rate , law and economics , microeconomics , monetary economics , political science , law , sociology , social science , biochemistry , chemistry , computer science , programming language
Summary This paper examines the relationship between ‘tax morale’ and tax policy. Using a unique cross‐country data set based on the World Values Survey and the World Tax Indicators, we find that income groups with high tax morale face higher average and marginal tax rates. We propose three possible mechanisms which could help to explain our results: i) an inverse elasticity argument where governments seek to minimize distortions, ii) a political economy argument where governments take voting behavior into account, and iii) an administrative costs argument where taxing high morale groups is more cost efficient.